Unpaid client invoices placing greater pressure on SMEs
The number of SMEs struggling due to late payments is still being felt, according to new research.
A recent study by Skynova aimed to determine how many SMEs are suffering from unpaid client invoices, the impact it has on their business, how long they wait before cutting ties with clients and the most effective methods to ensure invoices are paid on time.
According to the research, 45 per cent of small businesses surveyed are suffering from open past-due invoices. On average, each business has 15 late invoices from clients.
The research also found that 49 per cent of small businesses report a client completely stiffing them or refusing to pay for services. On average, the unpaid amount for a client refusing to pay is $3,000, the research said.
Further, the research found that over the past year, 15 per cent of small businesses have passed down the costs of these late payments onto their employees through decreased salaries, reduced benefits and layoffs.
Fifty-two per cent of businesses have had to cut ties with clients due to past-due or unpaid invoices, waiting less than five weeks before cutting ties with clients.
Meanwhile, nearly 20 per cent of small businesses indicated that they are having to put additional expenses on business credit cards due to unpaid and overdue invoices.
"Ultimately, the survey reveals business owners have power – and they can use this to get their clients to pay them. After all, clients come to small businesses because they need a product or service. While businesses do need clients to make money, they need to exercise selectivity to avoid these invoice nightmares," the research notes explained.
"Before entering into an agreement with a client, conduct your due diligence. Do they have notable reviews online? Are they a newer company? Where do they fit into your current set of clients? If they pay late, can your business survive?
"While the idea of a new client sounds exciting, there are substantial risks you need to consider. Given that five in 10 business owners deal with late invoices, do what you can to avoid these situations – otherwise, it may end up hurting you."
Emma Ryan
31 December 2021
accountantsdaily.com.au
Hot Issues
- Small businesses may ‘collapse under strain of payday super’, IPA warns
- ATO’s hands tied with scrapping on-hold debts, expert says
- What Drives Your Business Growth and Profits?
- Australian Taxation Office (ATO) shifting to firmer debt collection activity
- Why employee v contractor comes down to fine print
- Sharing economy reporting regime for platform operators
- Countries producing the most solar power by gigawatt hours
- Illegal access nets $637 million
- Accessing superannuation benefits.
- Does your business have a company Power of Attorney?
- Labor tweaks stage 3 tax cuts to make room for ‘middle Australia’
- GrantConnect
- 2 in 3 SMEs benefit from instant asset write-off, survey reveals
- Updated guidance on R&D claims
- Do you know how to recover debts?
- Wheat Production by Country
- Types of small business benchmarks
- What is a Commercial Lease?
- ATO warns advisers against suspect R&D tax claims
- The year of workplace law upheaval
- How to Resolve Invoice Payment Disputes
- Raft of revenue tweaks in MYEFO to raise millions
- The Countries that Export the Most Wine in the World
Article archive
- October - December 2023
- July - September 2023
- April - June 2023
- January - March 2023
- October - December 2022
- July - September 2022
- April - June 2022
- January - March 2022
- October - December 2021
- July - September 2021
- April - June 2021
- January - March 2021
- October - December 2020
- July - September 2020
- April - June 2020
- January - March 2020
- October - December 2019
- July - September 2019
- April - June 2019
- January - March 2019
- October - December 2018
- July - September 2018
- April - June 2018
- January - March 2018
- October - December 2017
- July - September 2017
- April - June 2017
- January - March 2017
- October - December 2016
- July - September 2016
- April - June 2016
- January - March 2016
- October - December 2015
- July - September 2015
- April - June 2015
- January - March 2015
- October - December 2014
What our clients say about us